世界发展银行-The-Kingdom-of-Eswatini-Toward-Equal-Opportunity---Accelerating-Inclusion-and-Poverty-Reduction_120页_3mb

Summary of the Systematic Country Diagnostic for Eswatini

Core Content

The Systematic Country Diagnostic (SCD) for Eswatini, titled "Toward Equal Opportunity: Accelerating Inclusion and Poverty Reduction", provides a comprehensive analysis of the country's economic and social challenges, governance structures, and policy priorities. Eswatini is a small, landlocked, and trade-dependent country with strong economic ties to South Africa. The report highlights the need for structural reforms to address poverty, inequality, and unemployment, while promoting inclusive growth and shared prosperity.

Main Points

1. Country Context

• Location: Eswatini is bordered by Mozambique and South Africa, and is part of the Common Monetary Area (CMA) with Lesotho, Namibia, and South Africa.
• Economic Dependency: The country's economy is heavily reliant on South Africa, with the lilangeni pegged at parity with the South African rand.
• Economic Trajectory: Eswatini experienced strong growth (8% annually) before the end of apartheid in 1994, but growth slowed after, averaging around 3% in the 2011–2018 period.
• Poverty and Inequality: Despite being a lower-middle-income country, Eswatini has high levels of poverty (58.9% in 2017) and inequality (Gini index of 49.3 in 2017). Poverty is predominantly rural, and the urban-rural divide has widened.
• Demographic Transition: The country is undergoing a demographic shift with rising life expectancy and falling dependency ratios, presenting an opportunity to harness the "demographic dividend."

2. Governance and Institutions

• Dual System: Eswatini operates under a dual governance model, combining a monarchical system with modern democratic institutions.
• Traditional Institutions:
  • Monarchy: The King holds supreme powers and is involved in appointments and land management.
  • Chiefs: Play a significant role in local governance and land distribution.
  • Swazi Nation Land: A communal land system managed by the King, which is not subject to the modern legal framework.
  • Tinkhundla: Traditional administrative units that coexist with modern governance.
• Modern Institutions:
  • Constitution: Establishes a democratic framework, though it is not fully implemented.
  • Public Administration: Largely underdeveloped and inefficient.
  • State-Owned Enterprises (SOEs): Many are unproductive and require restructuring.
  • Public Financial Management: Weak and inconsistent, contributing to fiscal instability.

3. Growth, Competitiveness, and Investment Climate

• Growth Drivers: Economic growth has been influenced by South Africa's performance, especially before 1994.
• Constraints on Growth:
  • Heavy state involvement in the economy limits private sector development.
  • Lack of transparency and weak business climate discourage investment.
  • Low agricultural productivity and uncompetitive export sectors hinder growth.
  • Exports are concentrated in a few products (e.g., sugar, textiles), produced by politically connected firms.

4. Poverty and Inequality

• Poverty Profile: Poverty is high and persistent, with a significant portion of the population living in rural areas.
• Inequality Trends: Inequality is high and deep-rooted, reflected in the Gini index and limited access to opportunities.
• Drivers of Poverty Reduction (2010–2017):
  • Growth contributed to poverty reduction, but it was not sufficient.
  • Education and labor market reforms had some impact.
  • Social protection was limited in scope and effectiveness.
  • Demographic changes and remittances also played a role.

5. Human Capital and Public Services

• Human Capital: Eswatini ranks low on the Human Capital Index (HCI), with a score of 0.37 in 2020, indicating poor educational and health outcomes.
• Education: Almost universal access to primary education, but secondary and tertiary education remain underdeveloped.
• Health: High prevalence of HIV/AIDS among youth, affecting adult survival rates and productivity.
• Public Services: Basic infrastructure (water, electricity, transportation) has improved, but access remains uneven, especially in rural areas.

6. Risks and Vulnerabilities

• Economic Risks: SACU revenue volatility, low fiscal reserves, and limited monetary policy flexibility.
• Migration: High levels of migration, especially to South Africa, driven by poverty, unemployment, and natural disasters.
• Climate Change: Affects agricultural productivity and food security.
• Energy: Reliance on limited domestic energy sources and vulnerability to supply shocks.

Key Policy Priorities

7. Policy Recommendations

• Strengthening Macroeconomic Management:
  • Improve public financial management and transparency.
  • Establish a stabilization fund to buffer against SACU revenue volatility.
  • Reduce public spending and control the fiscal deficit.
• Diversifying the Economy and Creating Jobs:
  • Promote private sector-led growth and reduce reliance on public investment.
  • Encourage SMEs through improved access to finance.
  • Expand and diversify the agricultural and manufacturing sectors.
  • Develop tourism and services for export-led growth.
• Strengthening Human Capital and Inclusive Public Services:
  • Invest in education and skills development, especially for youth.
  • Improve health outcomes, particularly in addressing HIV/AIDS.
  • Enhance access to and quality of public services in rural areas.
• Improving Resilience to Shocks:
  • Strengthen disaster risk management and climate adaptation.
  • Enhance social protection systems to reduce vulnerability.
• Credible Commitment to Policy Implementation:
  • Ensure transparency and accountability in governance and public services.
  • Implement consistent and effective policies across all sectors.

Conclusion

The SCD underscores the importance of addressing inequality of opportunity, which is a key barrier to poverty reduction and shared prosperity in Eswatini. It calls for a shift from a public investment-led to a private investment-led growth model, along with reforms in governance, human capital development, and infrastructure. The report also highlights the potential of the demographic dividend if the country can improve labor market conditions, skills development, and private sector absorption capacity.

The dual governance system, while deeply rooted in Swazi culture, presents challenges to modern economic development. Reforms in this area are essential to promote inclusive growth and economic resilience. The report concludes with a list of knowledge gaps and research questions to guide future policy and investment decisions.